Investors thinking about buying stocks and shares again are geing advised to tread carefully by the experts.

While the market is in recovery, it's not clear how stocks will perform over the next year.

It took almost three years to bring the market down from the speculative bubble of the late 1990's.

Most investors got burned badly as the prices of stocks plumetted.

Yet, just a few years later, with the market showing signs of a recovery, thousands of Irish investors are considering re-opening a share portfolio to catch the market on the rise.

The question is whether or not this is the beginning of steady, long-term growth in stocks and shares, or just a temporary rise in the fortunes of some of the more adventurous investors willing to take on huge risk?

"It's growing too high and too fast, in my view," says businessman, Pat Lynch, who has studied the market carefully over the last five years.

"I would advise people not to jump in right now."

Mr. Lynch has made healthy annual returns trading on the American stock exchange for the last number of years, while others have lost the shirts off their backs.

Mr. Lynch says, for anyone, who has not studied the market, now is a good time to sit on the fence.

"I study charts very closely, and, at the moment, these charts are indicating that there is a fall due in the stock market, sometime from now until the end of the year," says Mr. Lynch, MD of Microtech Cleanroom Services.

Less than a year after the stock market hit rock bottom, the investors who did not offload shares when prices fell so dramatically are keeping their fingers crossed for a steady recovery in the market.

Irish investors are hoping the worst is over, with the ISEQ index growing by more than 9% in the first half of 2003.

Can this growth be sustained in future months, and is now a good time for punters to return to the market?

According to the experts, most money is made in the early stages of a market rally.

Waiting until the top of the market to make a move is one of the classic mistakes made by retailer investors.

"Most people lose money in stocks and shares. We've all heard stories about someone we know who has lost a fortune. People are getting enthusiastic, now that the market is making a recovery, but they need to tread with care," says Mr. Lynch.

Mr. Lynch is a member of The Investment Club Network (TICN), which oversees investment groups around the country.

The club provides an associate, who is part of each group, to give support, advice, and guidance on investment matters.

The investment club deals exclusively in US shares, focussing on companies which have shown a 15% growth in profits and sales for the last five years, paying €100 per month into a fund.

Finding companies with excellent management, and which have shown a 15% growth or more in profits for five years, is challenging in the current bear market.

As a result, investment groups under the club's umbrella have a limited choice of companies to invest in each month.

"The risk factor in the stock market can be cut down significantly when you choose the right shares to invest in. It's easy for me to make money slowly using charts, but my focus is always on the long-term," says Mr. Lynch.

Positive news about a global stock market recovery is drawing investors back to the market.

The Nasdaq high-tech stock market has risen for the last three quarters in a row - a feat not achieved since the end of the bull market.

It rose 13.9% in the fourth quarter of 2002, 0.4% in the first quarter of this year, and 21% in the second quarter. All but eleven of the stocks in the Nasdaq 100 index are up, increases which have been fuelled by a series of optimistic reports.

While statisitics in some markets look impressive, the fundamentals remain rocky, with a number of analysts predicting that the market will again fall on the long road to recovery.

"Bubble 2 is now in the making," said Ben Stein, co-author of "Yes You Can Time the Market", in a recent letter to the Wall Street Jounal.

His view has been echoed by other market analysts.

Should an investor shrug off these warnings as pointless pessimism, or heed them and offload his/her shares?

Confidence in the ISEQ index has increased in recent weeks with recovering share prices, but will investors take the risk given the possibiblity of another market collapse?

"People are getting exited, once more, about the stock market. I would advise investors to think twice before buying shares and to study the markets," says Mr. Lynch. "If your are buying shares, then make sure the company has good growth prospects, no debt, and sound management. This requires research and may take time, but it's worth it," he says.

Stocks offer the hope of generous rewards precisely because they are risky, but Mr. Lynch says the risk factor can be reduced dramatically by investors willing to do their homework.

Joining an investment club is an option for would-be investors seeking to find out more about how the market works.

Alternatively, anyone interested in the market can study it by night.

There is a myriad of ways to invest money without undertaking too much risk.

Investing in stocks and shares can yield high equity returns, but investors should focus on buying shares with a good growth potential.

Market analysts are warning that growth has been too fast this year, but only time will tell whether share prices will dip significantly once again in the next six months to a year.